If the appraiser assigns your home too low a market value, your lender will reject your refinance request. When determining this market value, an appraiser will study the interior and exterior of your home. This includes going through every room in your house, including the rooms. An important part of what an appraiser looks for in a home is the interior condition and the amenities offered.
Even if the roof, siding and foundation are in excellent condition, the interior of your home is just as crucial for the home appraiser when evaluating value. Things like windows and doors, floors, walls, plumbing, electrical, kitchen and bathroom are essential parts of a home. While they usually don't pay as much attention to cosmetic details, they will take note if the house is particularly dilapidated. They will observe doors, windows, ceilings, walls and any faucets with visible leaks or electrical problems.
In most homes, the appraiser will have no reason to look into cabinets because they don't need to open them to measure living space. However, if there are obvious signs of deterioration, broken hinges, infestation, etc. It is best to do some organization before the assessment if they are messy. But they are generally not what hurts the appraisal of a home.
The Department of Veterans Affairs (VA) has established some specific guidelines for appraisals, since Veterans can use a single VA home loan. After performing the physical appraisal of the property, they will analyze comparable homes in their neighborhood and evaluate the size and sale price of nearby homes. Self-service appraisals are now common practice when refinancing a mortgage, since a home with a large amount of capital accumulated in it poses a lower risk to lenders. Usually, a lender will ask for an appraisal to make sure that you are not lending more money than the home is actually worth.
Even things you might consider basic, such as insulated windows, chimneys, a garage, or a security system, can add value to your home during the appraisal process. If you get stuck with a low appraisal, the first thing you'll want to do is get a copy of the appraisal report and review it with a fine comb. If your home has central air conditioning instead of individual air conditioners in each room, it may have a higher rating. In a refinance transaction, an appraisal assures the lender that you are not giving the borrower more money than the home is worth.
The fear, of course, on the part of the seller, is that his house, for some reason, will not be appraised. Unfortunately, if your surrounding area has experienced recent distressed sales, that can lower the appraised value of your home. If the paint is chipped, has unsightly wallpaper, rooms are half painted, or you have painted over a poorly patched hole, these things could damage your home appraisal. Termites, rodents, and other pests can cause irreparable damage to the house structure, so this will play a role in the evaluation process.
If you've been postponing home maintenance projects, it's important to finish them before the appraisal. Appraisers judge how good your home looks from the street because they know this will affect initial interest and willingness to pay more. Evaluators must follow the evaluation standards, as well as the guidelines of the lender's insurers when choosing compensation.
